Kellogg Cracks the Code on Loyalty

Marketer's Family Rewards Tracks 2.5 Billion Packages Across Full Portfolio

Can the maker of Raisin Bran and Pop Tarts be considered cutting-edge? When it comes to managing consumer data, Kellogg Co. appears to be just that.

When Kellogg rolled out its portfolio-wide loyalty program about a year ago, it had little historical insight into how consumers buy its products. Today, the program touches more than 90% of Kellogg's products, and the company's customer-relationship-management team expects to expand it outside the U.S.

"We were severely lagging behind about three years ago," said Dan Keller, VP-CRM and loyalty at Kellogg, "but our belief is that we've probably surpassed the [competitors] we track." Before launching the program, he said, "We were talking to every [consumer] as though they were all the same person."

The sprawling initiative, known as Kellogg's Family Rewards, relies on codes printed on product packages from Froot Loops to Keebler FlipSides crackers. Consumers submit the codes online in exchange for points -- say, 100 points for a box of Special K -- that they can use to collect discounts and prizes like toys or sports gear.

"It's not the only [loyalty] program like that, but generally speaking companies don't do that," said Ron Park, VP-retail consumer goods industry lead at Merkle, which manages CRM programs for clients including Kimberly-Clark and StarKist.

Coca-Cola's MyCokeRewards is perhaps the best-known cross-brand loyalty program. Started in 2006, it's amassed more than 20 million members and operates across 15 U.S. brands and more than 230 products, according to Ashish Arya, senior manager-digital marketing and My Coke Rewards, Coca-Cola North America. The company gleans data on consumption volume, demographics and consumer geography, as well as behaviors and affinities through the program.

"With increased amount of consumer data, we are able to better understand and market to our consumers with more relevant marketing communications that align with member preferences," said Mr. Arya.

Portfolio-wide loyalty programs might make more sense for firms like Kellogg or Coca-Cola, however, than other marketers, suggested Mr. Park, who questioned whether it would make sense for K-C to run a loyalty program involving all its brands, which include Huggies and Depends. "Consumers don't want to be in a loyalty program for baby diapers and adult ones," he said, noting a program for the company's baby products only would make more sense.

Codes are on 2.5 billion packages.

Kellogg's 16-digit loyalty codes, unique to each package, signal product type, size, and flavor, in addition to the store where consumers purchased items and store location. The codes are on around 2.5 billion individual packages.

"It enables us to know exactly what the product is," for instance, a 10 oz. box of Special K Red Berries featuring a "Monsters University" promotion, said Maria Keller, director-application solutions, digital marketing and IT at Kellogg. "It's that level of detail."

Kellogg ties the loyalty codes to its "K Numbers," the company's internal product codes. In the past, when consumers submitted codes for special promotions, it was unable to match them back to actual products, said Ms. Keller, who noted that gleaning customer information is difficult because "we don't own that relationship directly." She added, "This is the first time ever… we've ever understood exactly what the consumer is purchasing."

In 2010 Kellogg partnered with Epsilon to build its CRM database, which has information on 18 million consumers who receive targeted email offers. When the company realized it could be engaging the people in that database even better through a Kellogg-wide program, so it partnered with loyalty firm Aimia in June 2012. The 3.5 million Family Rewards members are a subset of that larger CRM database. Aimia handles the backend, enabling online code entry by Family Rewards members, and providing discount and prize offers.

"I have not seen a lot of other CPG players be able to get the traction within the organization" to run a portfolio-wide program, said Michelle Davis, VP-group account director at Aimia. "They can't quite figure out how to make that work."

The system enables Kellogg to integrate its promotions, which previously were managed separately by business units handling particular brand sets like the "morning foods" category.

"More companies are moving toward platform-based programs rather than brand-specific programs … but it's a slow move," said Haluk Nural, senior VP- manufacturer practice at Dunnhumby USA. Added Kellogg's Mr. Keller, "The main obstacle isn't money and resources: It's … "the current marketing structure and dependency on brand funding to run programs."